Travelers Prop. Cas. Co. of Am. v. Keluco Gen. Contractors

• Docket Number: S-18828
• Decision Date: 27 June 2025
• Citation: Travelers Prop. Cas. Co. of Am. v. Keluco Gen. Contractors, S-18828 (Alaska Jun 27, 2025)
• Parties: TRAVELERS PROPERTY CASUALTY COMPANY OF AMERICA, Appellant, v. KELUCO GENERAL CONTRACTORS, INC., COUNTRY MUTUAL INSURANCE COMPANY and COUNTRY MUTUAL, and GRETCHEN SANTERRE, Appellees.
• Court: Alaska Supreme Court

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TRAVELERS PROPERTY CASUALTY COMPANY OF AMERICA, Appellant, v. KELUCO GENERAL CONTRACTORS, INC., COUNTRY MUTUAL INSURANCE COMPANY and COUNTRY MUTUAL, and GRETCHEN SANTERRE, Appellees.

No. S-18828

Supreme Court of Alaska

June 27, 2025

Appeal from the Superior Court of the State of Alaska, Third Judicial District, Anchorage, No. 3AN-19-04881 CI Una S Gandbhir, Judge.

Thomas Lether, Lether Law Group, Seattle, Washington, for Appellant.Debra J. Fitzgerald and Jonathon A. Katcher, Anchorage, for Appellee

Keluco General Contractors.Brewster H. Jamieson, Lane Powell LLC Anchorage, for Appellee

Gretchen Santerre.Notice of nonparticipation filed by Rebecca J. Hozubin, Hozubin, Moberly &Associates Anchorage, for AppelleeCountry Mutual Insurance Company and Country Mutual.

Before: Carney, Borghesan, Henderson, and Pate, Justices.

[Maassen, Chief Justice, not participating.]

OPINION

HENDERSON, JUSTICE.

I.INTRODUCTION

A general contractor secured a workers' compensation and employers' liability policy through an insurer.The policy was set to last one year.Following that one-year term, an employee of the general contractor was injured at work.The general contractor attempted to make a claim on its workers' compensation policy and learned that the policy had expired.The insurer claimed to have sent a notice of nonrenewal to the general contractor and its insurance agent prior to the expiration of the policy, pursuant to state law.But the general contractor claimed not to have received the notice of nonrenewal.

Upon discovering it did not have an active workers' compensation insurance policy, the general contractor sued its insurance agent for failing to inform it of the nonrenewal notice, and the insurance agent filed a third-party complaint against the insurer under an allocation of fault theory.Following multiple rounds of summary judgment motions, the superior court granted partial summary judgment against the insurer and in favor of the general contractor, ruling that the insurer failed to send the general contractor notice of the nonrenewal of its policy in the manner required by statute and, as a result, breached its contract with the general contractor.

The insurer appeals, arguing the court made various procedural and substantive errors in its rulings.Seeing no error in the court's orders on summary judgment, we affirm those rulings.But we reverse the court's determination of when prejudgment interest began to accrue, and remand for recalculation of prejudgment interest.

II.FACTS AND PROCEEDINGS

A. Keluco's Insurance Policy, Worker Injury, And Initiation Of Suit

On March 15, 2016, Travelers Property Casualty Company of America issued a workers' compensation insurance plan to Keluco General Contractors, Inc.The plan was set to expire on March 5, 2017.Keluco secured the Travelers insurance policy through its insurance agent, Gretchen Santerre.At the time, Santerre worked for Country Mutual Insurance Company.

Around January 7, 2017, Travelers mailed a renewal notice to Keluco in advance of its policy expiration.^[1] Travelers also mailed the renewal notice to Santerre.The notice advised that "[i]n order to avoid a lapse in coverage, [a] renewal payment must be received prior to the expiration date shown on [the]bill."Santerre testified that she also emailed this renewal notice to Keluco's bookkeeper after receiving it in the mail; however, she accidentally sent the notice to the wrong email address.Keluco claimed that it never received the renewal notice, either by mail from Travelers or by email from Santerre.Keluco's workers' compensation policy thereafter lapsed in March 2017.

On September 20, 2017, a Keluco employee suffered injuries in a work-related accident.Following the accident, Keluco learned that its workers' compensation insurance policy had lapsed.Shortly thereafter, the employee pursued workers' compensation claims against Keluco.The State also pursued civil penalties against Keluco due to its lapse in coverage.

In January 2019 Keluco sued Santerre and her employer, Country Mutual.Keluco alleged negligence by Santerre for breaching her duty to communicate with Keluco about its insurance plans.It also alleged that Country Mutual, her employer, was vicariously liable.In an amended answer to the complaint, Santerre filed a third-party complaint seeking to allocate fault against Travelers, alleging that Travelers failed to notify her that Keluco had not renewed its policy.Travelers initially answered by denying all substantive allegations.Travelers then amended its answer to file a counterclaim for "contribution" against Santerre.Keluco was permitted to amend its complaint in August 2022 to allege direct claims of negligence and breach of contract against Travelers.

B.Summary Judgment Motions

The parties engaged in extensive summary judgment motion work.Among the motions was a summary judgment motion filed by Travelers, contending in part that Travelers met its duty to provide Keluco with notice prior to the expiration of its policy.The superior court denied Travelers' motion, ruling that genuine issues of material fact related to the sufficiency of Travelers' renewal notice prevented summary judgment at that time.

Keluco later filed a motion for partial summary judgment against Travelers, arguing that Travelers failed to mail its notice of renewal in the manner required by statute.In particular, Keluco claimed that Travelers' process for mailing the notice violated AS 21.36.260^[2] in that the insurer failed to obtain a certificate of mailing from the United States Postal Service (USPS).

Travelers opposed summary judgment, arguing that its process for mailing required notices was sufficient under the law.Travelers explained that it sent the notice from the Norcross Data Center, a USPS designated Detached Mail Unit (DMU).As defined by Travelers' expert witness, a DMU is "an area within a facility where postal employees perform mail verification, acceptance, dispatch, and other postal functions."

Travelers contended that its internal mailing records, which were submitted to USPS, but required no verification by USPS, satisfied the proof-of-mailing requirement.The company explained that it sends its mail, including the notice, as "First Class with Affidavit" and uses a version of USPS form 3877 as its evidence of mailing.USPS Form 3877 qualifies as a Certificate of Mailing when a stamp is affixed to the form, "certified" is checked as the type of mail on the form, and the postmaster has signed the bottom of the form as the receiving employee.Here, Travelers produced a USPS Form 3877 denoting that mail was addressed to Keluco during the relevant time period, but the form lacked the requisite certificate of mail stamp and contained no certification by a postmaster of receipt of mail.

The court granted Keluco's motion for partial summary judgment regarding Travelers' noncompliance with AS 21.36.260.The court found that neither party contested the facts alleged by Travelers concerning its internal mailing procedures, and concluded that, contrary to the requirements of AS 21.36.260, those internal mailing procedures did not include obtaining a certificate of mailing from USPS.

Keluco filed an additional summary judgment motion, arguing that because Travelers failed to obtain the certificate of mailing required by AS 21.36.260 when sending its renewal notice, it also violated AS 21.36.240, the law governing an insurer's failure to renew a policy, and breached its contract with Keluco.Travelers opposed, arguing among other things that Keluco and the court had misinterpreted the requirements of AS 21.36.260.

The court granted summary judgment, ruling that Travelers violated AS 21.36.240 and breached its contract with Keluco.Regarding breach of contract, the court determined that Travelers breached its insurance contract with Keluco in two ways: first, by breaching the portion of the contract known as the Alaska Cancellation and Nonrenewal Endorsement (Alaska Endorsement), which made compliance with both AS 21.36.260andAS 21.36.240 a condition of the contract; and second, by failing to defend Keluco against its employee's workers' compensation claim.

C.Dismissal Of Santerre And Country Mutual As Settling Parties And Dismissal Of Travelers' Contribution Counterclaim Against Santerre

After both Santerre and Country Mutual reached settlement agreements with Keluco, they moved to be dismissed from the case.Travelers did not oppose the dismissal outright, but rather sought to preserve its ability to bring claims for contribution and allocate fault to both parties.The court issued a notice of intent to grant Country Mutual's motion unless any opposition or other response was filed.

Santerre subsequently sought dismissal of the one claim still pending against her, Travelers' contribution claim.Santerre argued that pursuant to AS 09.17.080, Travelers would still be permitted to allocate fault to her as a settled party, regardless of Travelers' contribution claim.^[3] Travelers disagreed and argued that in order for it to assign comparative fault to Santerre in relation to Keluco's claims against it, Santerre must remain a party.

The court granted Santerre's motion and dismissed Travelers' third-party claim for contribution against her with prejudice.Consequently, Keluco voluntarily dismissed its own negligence claim against Travelers, leaving its breach of contract claim before the court.

D. Keluco And Travelers' Stipulation And Final Judgment

Keluco and Travelers thereafter entered and filed a stipulation to final judgment.The parties stipulated to the amount of damages owed by Travelers, including that Travelers would receive an...